Steve-BurkinSteve Burkin, Director at One Stop Finance Ltd, lifts the lid on Equity Release and how it can help older people get their hands on a lump sum or an income …

 

There are many myths surrounding Equity Release. People are often scared off by stories that you could lose your home, saddle your children with debts, won’t be able to move or it’s unsafe and unregulated, but it has come a long way since regulation came into force in 2007.

 

If you are 55+ you can safely take advantage of your greatest asset to fund your lifestyle, or need funds to help your family, for health care or supplement your pension income, it can be well worth considering.

 

So what is Equity Release?

 

Equity Release is a way of releasing the value tied up in your home to generate a tax free lump sum or income without selling or downsizing. You continue to own the property 100%, keep the deeds in your name, and have the right to remain in your property for life.

 

Many people who have retired have seen their savings dwindle from a combination of low interest rates and inflation. They can also find it more difficult to borrow money.

 

So an Equity Release plan is a solution to make use of a most highly valuable asset.

 

How does Equity Release work?

There are three types available …

 

Roll-Up Lifetime Mortgage – This lets you take out a loan secured on your property to be paid back when you die from the proceeds of selling the house. You remain the owner of your home.

 

Drawdown Lifetime Mortgage – This allows you set up a drawdown facility in a reserve account and use as and when required. Interest is paid only on the amount drawn down, with the balance held in reserve.

 

Interest-Only Lifetime Mortgage – As with the two products above, you receive a lump sum and maintain 100% ownership. Unlike the others, you can choose to pay the interest on a monthly basis if you wish with the option to roll up interest at some point in the future if you wish.

 

With all systems you have the ability to repay the loan in part or whole outside predetermined time limits.

 

Is it right for me?

 

Raising income from your home is a big decision and might not be your best or only solution. It’s important to discuss it with your family so they understand how it works and how it may affect them.

 

It’s also essential to get professional financial advice to ensure that it would be right for you, meets your needs and explore other options that may be available.

At One Stop Finance we have years of experience which enables us to provide the right advice for our clients.

 

We recognise that each person’s situation is different and ensure we carry out a thorough assessment of their needs, their situation and the options available to advise them accordingly.